Credit Union Balances Rise, Led by Consumers on Both Ends of the Credit Risk Spectrum

Rhea-AI Summary

TransUnion's Q3 2024 Credit Union Market Perspectives Report reveals continued growth in credit union balances across all products, with notable increases in super prime and subprime risk tiers. Key findings include:

1. Home equity loan balances grew 14.4% YoY
2. Bankcard balances increased 8.6% YoY
3. Personal loan originations rose 7.0% YoY
4. Mortgage originations saw a slight uptick of 1.8% YoY

The report also highlights lower delinquency rates for credit unions compared to other financial institutions. With the Federal Reserve signaling potential interest rate cuts, experts anticipate increased demand for mortgages and auto loans. The report emphasizes the importance of data-driven, modernized marketing strategies for credit unions to remain competitive in 2025.

Positive

• Credit union balances grew across all consumer lending areas in Q2 2024
• Home equity loan balances increased by 14.4% YoY
• Bankcard balances grew by 8.6% YoY
• Personal loan originations rose by 7.0% YoY
• Mortgage originations increased slightly by 1.8% YoY
• Delinquency rates for credit unions are lower compared to other financial institutions
• Credit union unsecured personal loans and HELoans saw YoY decline in delinquencies

Negative

• Originations for many products remain below levels seen two years ago
• Balance growth is uneven across credit risk tiers
• Prime Plus, Prime, and Near Prime risk tiers saw balance share declines for two consecutive years

TransUnion’s Q3 2024 Credit Union Market Perspectives Report explores the current state of consumer credit and its impact on credit unions

CHICAGO, Sept. 05, 2024 (GLOBE NEWSWIRE) -- The newly released Q3 2024 Credit Union Market Perspectives Report from TransUnion (NYSE: TRU) found that balances continue to rise across all credit products, led by share growth among consumers in the super prime and subprime risk tiers.

Among credit unions, balances grew among all consumer lending areas in Q2 2024. Growth ranged from 2.7% in credit union auto balances up to 14.4% for home equity loan balances as borrowers continue tapping into the equity in their home to make home improvements, consolidate other debt, or pay for other large purchases, like education expenses. Bankcards also saw significant YoY balance growth, up 8.6% over the period.

“Despite a consumer credit market in which originations for many products remain below levels we saw two years ago, credit unions continue to see their total balances increase as they continue to serve the needs of their members,” said Jason Laky, executive vice president and head of financial services at TransUnion. “It will be interesting to watch new loan growth as credit union deposits return to growth and interest rates likely begin falling later this year.”

Taking a deeper look at credit balances, growth has not been equal among all credit risk tiers. In fact, credit unions are now seeing a greater share of their overall balances being found among consumers in the super prime and subprime risk tiers, while other risk tiers saw their shares decline YoY. Each of these other risk tiers has seen their balance share decline for two consecutive years.

Overall Concentrations in Super Prime and Subprime Consumer Balances Have Increased, While Balances in Other Tiers Declined

	Q2 2022		Q2 2023		Q2 2024
Super Prime	38.8%		39.6%		40.6%
Prime Plus	18.9%		18.0%		17.3%
Prime	17.6%		17.1%		16.4%
Near Prime	12.3%		12.2%		12.0%
Subprime	12.4%		13.1%		13.7%

Source: TransUnion Consumer Credit Database

Among subprime, Q2 2024 represented the fourth consecutive YoY growth in balance share.

On the origination front, Q2 2024 (the latest quarter available for origination data) saw increases in two key lending areas with personal loans up 7.0% YoY and mortgage finally seeing a slight uptick (+1.8% YoY) after a long period in which higher interest rates have kept people waiting to buy. With the Federal Reserve’s recent signaling that the time has come to cut interest rates, other lending products may similarly see the beginning of an upward trend in loans among credit union customers.

“With the Fed all but confirming that their next meeting will finally be the time for rate cuts, it would not be surprising to see much of that pent-up demand for mortgages and auto loans begin to finally be realized as more people who have been on the sidelines finally engage,” said Sean Flynn, senior director of community financial institutions at TransUnion.

Delinquencies remain lower among credit union members as compared to other financial institutions

Delinquencies across most credit union lending products are no longer seeing the elevated growth rates of 2021 and 2022, leveling off for some products and even declining YoY for unsecured personal loans and HELoans. Additionally, credit unions continue to see delinquency rates lower than other lenders. Credit unions saw 0.8% account-level 60+DPD delinquency in Q2 2024. In comparison, FinTech/specialty lenders saw 3.0% 60+ DPD in Q2 2024 while other banks ranged from 0.9% to 1.6%.

Flynn concluded, "It's exciting watching the growth and innovation taking place in credit unions. As we look to 2025, it's becoming increasingly clear that to remain relevant and to continue attracting today's consumers, credit unions need to have data-driven, modernized marketing strategies in place. Whether that's more optimized marketing spend in digital advertising or advanced acquisition tools that drive more targeted campaigns, credit unions will need to leverage data and technology to meet consumers where they are, with offers that mean something to them."

To learn more, visit the Q3 2024 Credit Union Market Perspectives Report.

About TransUnion (NYSE: TRU)

TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.
http://www.transunion.com/business

Contact	Dave Blumberg TransUnion
E-mail	dblumberg@transunion.com
Telephone	312-972-6646

FAQ

What were the key findings of TransUnion's Q3 2024 Credit Union Market Perspectives Report for TRU?

The report found continued growth in credit union balances across all products, with notable increases in super prime and subprime risk tiers. Home equity loan balances grew 14.4% YoY, bankcard balances increased 8.6% YoY, personal loan originations rose 7.0% YoY, and mortgage originations saw a slight uptick of 1.8% YoY.

How did credit union delinquency rates compare to other financial institutions in Q2 2024 for TRU?

Credit unions saw lower delinquency rates compared to other financial institutions. Credit unions had a 0.8% account-level 60+DPD delinquency rate in Q2 2024, while FinTech/specialty lenders saw 3.0% and other banks ranged from 0.9% to 1.6%.

What was the growth rate of home equity loan balances for credit unions in Q2 2024 according to TRU's report?

According to TransUnion's report, home equity loan balances for credit unions grew by 14.4% year-over-year in Q2 2024.

How did personal loan originations perform for credit unions in Q2 2024 based on TRU's data?

TransUnion's report showed that personal loan originations for credit unions increased by 7.0% year-over-year in Q2 2024.